Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2013. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (pages 81-82). / This paper examines and projects fundamental characteristics of the London Office rental market which is facing supply and demand issues in upcoming years despite being considered one of the few safe haven places for real estate investors during the recent worldwide financial uncertainty. The paper divides the Central London market into four submarkets: Docklands, Midtown, City, and West End. The key issue the paper will examine, aside from projecting future market fundamentals for a 10 year period, is whether on an econometric analysis level it is better statistically to analyze the market utilizing one singular model or to model each submarket separately then sum the outputs. First, the paper will discuss the history and development of the economic model, then discuss what papers have analyzed the London office market utilizing econometric models, and finally what previous studies have examined submarkets utilizing econometric models. Next, the paper will analyze what's occurred from 1986-2012 and try to offer some explanation of why the markets have behaved the way they have on a submarket and aggregate level. Next, the paper will present the model utilized to project the conditions for 10 years and examine back tests for the previous five years (2008-2012) to examine how well the model would have predicted the actual events of the time period. This study derives three main econometric equations for each submarket and Central London as a whole. The rental equation is explained by a lag of one year of rent and the current quarter's vacancy. The demand equation is explained by a 1 year lag in occupied stock, the current level of government service employment, the current level of fire, insurance, and real estate employment, and a four year lagged vacancy. The supply equation is explained by a 1 quarter lag in yield, a 1 year lag in yield, the current bond rate, the current real rental rate, a 1 quarter lag in real rental rate, and the spread between 10 year government bonds and corporate bond rates. The model is utilized both on each submarket and on the Central London market as a whole. Finally, the paper examines the differences in aggregating the submarkets versus modeling Central London in one model. This is done by comparing the models outputs for the previous 5 year back test and also for the 10 year projections. / by Matthew E. Waisnor. / S.M.in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2017. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (page 64). / After explosive development in the past half decade, the co-working industry is seeking changes to enhance the sustainability of its business model. Despite early success, the buy-bulk-sell-piece model does not promise a high return today due to the increasing cost of rent. Floating revenue and high fixed cost make the model fundamentally risky, imposing challenges for co-working companies to withstand the next recession. In the face of intensifying competition, major co-working players are expanding their businesses aggressively, aiming to benefit from economies of scale. The demand for funds is greater and more urgent than ever. Aside from commercial loans and venture capital, co-working companies are seeking more flexible and sustainable financing sources for growth. On the supply side, traditional real estate companies now have fewer doubts and greater interest in participating in the co-working business. While a small group have chosen to start their own spaces, more are looking for strategic cooperation with co-working players that have proven track records. This thesis conducted a study of the co-working operating model in an attempt to elucidate the optimal solution that benefits both sides of the business. Following a brief industry overview, it discusses the revenue and cost structure of the co-working space and the pros and cons of five co-working operating models. With that understanding, it constructs a DCF model of a mock-up co-working project and develops cash flows for both participants to analyze their return and risk profile under each operating model. The results suggest that the joint venture model is the optimal solution for co-working companies in business expansion, and property owners with passive investment positions. Further, the management model is the best choice for more matured co-working companies with strong brand influence and concentration on management service. It also indicates that the transformation from the lease model to the management and franchise model requires co-working companies to have a strong brand, proven track record, and an established member network. While for property owners, such transformation depends on its willingness of exposure to the co-working business, as well as the capital cost, risk tolerance, and investment horizontal. / by Wensi Zhai. / S.M. in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2011. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (p. 60-63). / Changes in the issuance of Commercial Mortgage Backed Securities are examined and contrasted with market events and policy action during the financial crisis of 2007-2009. Additionally, a sample of investment-grade Commercial Mortgage Backed Securities are separated by original rating and observed in a time series chart against the market events and policy actions from June 2007 through May 2010. / by Michael J. Ellch. / S.M.in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2017. / Cataloged from PDF version of thesis. / Includes bibliographical references (page 53). / In the history of the Chilean real estate market, little has been done to study the price dynamic of real estate. Currently, the Chilean industry has two types of residential indices that do not effectively present the available information. One of the existing indices uses the correct methodology (Hedonic Method), but it does not represent the whole metropolitan residential market. The second index has enough data, but the methodology (stratification or mixed adjustment method) is not the most appropriate because of its simplicity, given the great quantity of information available on the market. We briefly review different index methodologies, and base an extensive database on reliable information from the greater Santiago market. We created two types of Hedonic price indices (Pooled and Chained) for residential and commercial real estate, respectively. These hedonic methodologies are based on an econometric model to account for the problem of the heterogeneity of real estate; each property is unique within its characteristics, and should not be read independently. Thus, the objective of an index is to estimate the marginal contribution of those characteristics and generate a quality-adjusted price index. Between the two different results, we analyze the advantages and disadvantages of each methodology, and why should choose one over the other in each situation. For the most of the results we obtained, they are consistent with the existing indices having nominal return of 98% and 117% for the residential market and 58% for the commercial. Our indices show some subtle differences, and they are based on a more rigorous and sophisticated methodology that is consistent with the recommendations of the Eurostat International CPPI Handbook. Finally, this document should be the first step to internationalize and professionalize the processes of measurement and should be helpful to make better public and private decisions within the Chilean real estate market. / by Juan José Bulnes Valdes. / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2016. / Title as it appears in the Degrees awarded booklet, Feb. 17, 2016: A N lease for housing rental: transferring the property taxes to renters. Cataloged from PDF version of thesis. / Includes bibliographical references (pages 140-141). / Ownership rates have been decreasing since 2004, and the rental market is becoming less affordable each day. A rent-to-own agreement would reduce barriers to purchase a property for future buyers. However, to promote this type of contract it is necessary to demonstrate that investors will be exposed to lower risk, or higher returns, than in a traditional lease. Since taxes are an important part of a real estate investment, this thesis analyzed if this risk can be mitigated by passing the taxes to the tenants. While rents and prices respond to market conditions, property taxes do not show a clear trend of how they change, leaving investors exposed to a high risk. In addition, property taxes significantly differ among states since they vary with the financial needs of each local government. Moreover, the effective tax rate can also differ from town to town, and even within the city because of the different tax districts in which the property is located and the No Ad Valorem taxes. The evolution of taxes, prices and rent in Massachusetts, and within the cities of Arlington, Newton and Wellesley is explored in this thesis to understand how property taxes evolve over the years and see if changes in rent and/or prices upset variations in taxes. In addition, this thesis also considers the evolution of these variables in Larimer County, Colorado, and in Oak Park, Illinois. Moreover, this thesis analyzed the potential return of a residential property in each of the cities studied to establish if there is any financial advantage for signing in a RTO agreement instead of a traditional lease, and if capping the taxes would reduce the financial risk. The data shows that in cities that saw a high appreciation or rental growth singing a rent-to-own contract was not the best alternative for investors since their return would have been lower. In addition, passing the taxes is not attractive enough to investors since the additional points that this procedure offers are not significant, and in some case, when taxes decrease, they actually decrease the investor's return. / by Lina M. Jimenez Mejia. / S.M. in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2012. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (p. 111-112). / Real estate development (RED) has traditionally been a very dynamic business, where real estate developers strive to turn an idea into a real asset, by delivering a quality project on time and on budget. In recent years, Modular Construction Methods (MCM) has arisen as an innovative solution to commercial RED projects that require higher levels of the three aforementioned factors, with a special emphasis placed on time. The purpose of our thesis is to explain MCM and its impact on RED by analyzing the interdependent relationships between the different tasks performed during the course of a development. We have accomplished this by using the Design Structure Matrix (DSM), a systems engineering tool, to map out the dependencies between development tasks in a graphical manner. To develop our DSM model for an RED process that uses MCM we conducted interviews with the senior management at RJ Finlay, a New Hampshire based full service real estate firm and Keiser Industries, a modular manufacturing company that operates in Maine and is owned by RJ Finlay. To fully understand the real application of the MCM process to RED, we met with the general contractor, lead architect and project management team for 30 Haven, a commercial RED that uses MCM. 30 Haven is located in Reading, Massachusetts and has been co-developed through an integrated project delivery (IPD) process by RJ Finlay and Oaktree development, using an in-house general contractor and Keiser Industries as its modular manufacturer. Our interviews occurred weeks before the project was completed in the summer of 2012. This allowed us to interview the involved parties about the whole process from inception to construction completion. This helped us further understand the actual problems a RED process using MCM can face throughout the preconstruction and construction processes. We then developed a DSM that showcases the different stages that a RED process using MCM have to go through and the planned and unplanned iterative processes for each stage. Planned iterations are feedback loops between tasks that are meant to rework tasks that forcibly need it, while unplanned iterations reflect feedback loops that occur because of unexpected events. Our thesis has focused on proposing proactive solutions to the unexpected events (referred to as "failure modes") a RED process using MCM can face, by either eliminating them or minimizing their likelihood and impact. The DSM helped facilitate the development of both a normative model and an optimal one, where our solutions for the unplanned iterations were applied. We complemented our findings with a hypothetical financial model that uses the normative and optimal DSM models to show the difference between both in terms of the returns, time and cost for a generic multifamily RED that uses MCM. / by Steven V. Bonelli and Adrián M. González Guerra. / S.M.in Real Estate Development

Thesis (S.M.)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate , 2009. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from PDF version of thesis. / Includes bibliographical references (p. 85). / The mission of our thesis is to assist residential real estate investors and developers in making more systematic investment decisions when selecting Chinese cities. In particular, our thesis has three major objectives, (1) to understand the residential price appreciation with respect to economic growth among 35 core Chinese cities, (2) to understand the dynamics of the residential market fluctuation, and (3) to predict the residential market movement. Our models have suggested that the residential markets of Tier II Chinese cities shall outperform those of the other tiers in terms of capital appreciation under a sustainable economic growth condition, with Tier I Chinese cities experiencing the least collective growth. Interestingly, our models have suggested that historical performance is a relatively good indicator of medium-term performance, in terms of capital appreciation potentials, under an up-market cycle. Our results have indicated that the capital appreciation performance ranking of our 5-year prediction period to 2012 are relatively consistent with the capital appreciation performance ranking of the historical 9-year trend between 1999 and 2007. In particular, our top five cities with the highest capital appreciation for the 5-year period to 2012 are Xiamen, Ningbo, Nanchang, Taiyuan, and Fuzhou, respectively; in comparison, the top five cities with highest capital appreciation for the 9-year period to 2007 are Ningbo, Xiamen, Qingdao, Nanchang, and Xian, respectively. / (cont.) In terms of residential market dynamics, our models have revealed that the increase in sales transaction volume, the decline in real prime rate, and the loose mortgage policy have all contributed to the overheating of the Chinese residential market in 2007. But as the monetary policy and lending standards tighten, the sales volume was curbed and prices lost its steam. We observed that the policy change was not the only cause to the slowdown in sales transaction volume, but also the continued sales price growth; in fact, the policy change was a cause of the over-heated market. If the current pattern continues and supported by favorable policy, we expect the market shall show signs of relief in 2010; however, if prices over-shoot in the coming months, the market performance may actually reverse. / by Philip Gin Shun Wang and Jia Qian. / S.M.

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2014. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (pages 75-81). / Enrique Peña Nieto, Mexico's current president, voiced strong support for extending the social mission of INFONAVIT -- the largest mortgage lender in Mexico -- to embrace quality of life metrics. He also indicated a strong interest in expanding housing opportunities to segments of the population who are currently not being served by the housing funds and banks to the extent that the right to a dignified home is enshrined in Mexico's Constitution. In order to continue giving greater importance to quality of life metrics and not just lending volumes, INFONAVIT strategy will focus on the creation of cities that are more efficiently organized and less segregated in an unprecedented effort to move towards an inclusive, prosperous Mexico on the basis of orderly and sustainable urban development. INFONAVITs 2013-2022 financial plan projected cash flow growth of 8.82 % CAGR and its strategic agenda focused on four dimensions: i) Housing needs: providing funding and housing solutions that enhance the welfare of workers; ii) Social balance: ensuring housing quality and sustainability and promoting urban planning with a focus on employment growth; iii) Scope of policies: expanding connections with other housing institutions and aligning programs and policies with strategic sector guidelines; and iv) Risk & Return: sustaining strong financial and operational performance. The process of urban development is incremental for low-income households in Mexico since a significant percentage of the population has no possibility of living in dwellings constructed by the formal sector. Mexico is currently facing significant challenges in its future housing requirements. Specifically, this thesis will focus on three different proposals that complement the vision of President Enrique Peña Nieto and that could enhance the affordable housing sector in Mexico in order to create a better future for local residents. The proposals are: i) the creation of affordable Mexican edge cities, ii) the exploration of the Section 8 tenant-based housing voucher program practiced in the United States, and iii) the use of housing development as a regional development tool coupled with an industrial policy to rescue the Mexican southern region from deep-rooted stagnation and to potentiate the multiplier effect on the economy. Housing is a strategic sector for the economic growth and social development of Mexico since it triggers investment, creates jobs, strengthens the local market, and improves the quality of life of Mexican families. In order to analyze these proposals, this thesis reviews multiple reports from the Mexican government, industry, and academia. This is an exploratory document that will aim to provide useful information to policy makers in Mexico. / by Alba Medina Flores. / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2015. / Cataloged from PDF version of thesis. / Includes bibliographical references (page 47). / This paper examines the spatial structures of commercial real estate buildings (Offices, Retails) in four Chinese cities: Beijing, Shanghai, Shenzhen, and Guangzhou. In contrast to previous studies, this paper focused on the changes of the spatial pattern by involving the time variables to categorize the buildings into 3 time periods (Before 1995, 1996-2005, and 2006-2015). The research questions are: How strong and general is the tendency of offices and retails to cluster? At which spatial scale these clustering occurs? How does the clusters change with time? To test the localization in those cities, I applied distance-based agglomeration measures developed by Gilles Duranton and Henry G. Overman (2004) in this largely new context - to measure spatial structure in different time period at the metropolitan scale, which avoid problems relating to scale and borders. I find that: (1) Agglomeration forces cause offices to cluster in all of the four cities, but the clustering is much weaker in retails than offices. All four cities exhibit some localization in both types of real estate products. (2) With the development of cities, the clustering scales for all of the four cities are expanding. (3) There are some differences in the spatial structures among the four cities, the reasons might relate to the functions and the development stages of each city. Overall, the more mature a city's real estate market is, more dispersal spatial pattern is observed. (4) With the expansion of cities, the sizes of shopping centers and offices are increasing, too, especially between year 2006 and 2015. / by Meng Xu. / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2016. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 79-80). / The affordable housing crisis in the United States is real and persistent. In the face of growing economic inequality and the failure of public housing programs, American cities need the development industry to deliver more affordable housing units than ever before. Instead, the affordable housing development process is regarded as a fragmented nexus involving multiple public and private sector parties. Raising capital for affordable housing projects is notoriously complex; it is common to see individual apartment buildings funded by a mix of any of the following: public grants, federal tax credits syndicated through private lenders, interest-free debt from community lenders and municipalities, mortgage debt from commercial lenders and private equity. A good affordable housing developer must be adept at understanding the covenants and eligibility requirements of every source of funds as part of the development process, and work with the myriad parties to compete or apply for funds. This long and convoluted process raises high barriers to entry into the industry and slows down the production of a public good. This thesis investigates the possibility of an alternative funding model for affordable housing development and proposes that developers go public to raise capital, adopting the same tried-and-tested method of financing real estate development that commercial developers have relied on for nearly 30 years. This thesis will argue that a REIT can function as an organizing mechanism to simplify the process of raising capital across different pools of institutional equity, private wealth and public funding. By being able to turn to the widest capital markets for fundraising, affordable housing developers can be nimble in choosing when to raise capital and flexible in deploying it to build experimental mixed-income and workforce housing, two typologies of housing that have been identified as helping to make urban areas more inclusive. Through this thesis, I posit that the affordable housing development REIT can serve as the central platform to consolidate the various pools of triple-bottom- line investors and to create for the first time a public market for an asset class that exhibits all the features of a stable, long term core investment. / by Xiang Ying Estelle Chan / S.M. in Real Estate Development